http://www.silverdoctors.com/andrew-maguire-dissects-515-ton-paper-gold-dump-prior-to-june-fomc-statement/
Andrew Maguire Dissects 515 Ton Paper Gold Dump Prior to June FOMC Statement
Over the past year, SilverDoctors has documented several cartel raids in which the bullion banks dumped over an entire year’s global mining output in silver during paper raids.
Many have doubted the validity of these claims, as the official open interest reported by the CME the next day is often less than the reported volume of paper contracts dumped during the raid.
Andrew Maguire has released an excellent commentary dissecting the 515 ton paper ‘gold’ raid launched by the bullion banks immediately prior to the Fed’s release of the June FOMC statement. Maguire clarifies how the cartel can accomplish the raid and yet not have the occurrence appear in the CME OI report.
Andy states that of the 165,000 paper gold contracts dumped on the market: ‘Almost all these contracts were subsequently covered by the bullion bank into the days pit close thereby not showing up in the closing OI #.This is a standard MO. ‘Through concentration, creating sufficient new supply at commonly watched pivots in a very short period of time to swamp any bids distorting true supply demand fundamentals, then once the momentum is turned down, to buy back all originating short positions into freshly pitched longs and a whole array of freshly invited new shorts.
Obviously, there is always a long for every short etc. but nevertheless the equivalent of 515 tons of paper gold was sold that would not have been sold had the bullion banks not used the power of their concentration to create sufficient supply to instigate and then game carefully orchestrated air pockets for the market to do the rest of the heavy lifting. This resulted in a stair step transference of COT shorts and was conducted at the expense of, (MM, spec’s and techs), initially by tripping longs stops, then drawing in fresh short supply on the breach of very obvious technical supports. (In this case with volume through the well watched 50 & 10 DMA’s).
These progressive breaches activated stair step knee jerk momentum selling and flipped the always present ‘neutral algo’s’, (as dissected in a prior MT commentary), over to a sell side bias. Guess who was on the other side of those trades profitably buying back the newly instigated supply? The daily downward move was then consolidated with a bearish close just below the 10DMA. (Bear in mind long or short stops are clearly visible to the 2 COT bullion banks identified in the OCC reports, concurrently holding the book on over 97% of all OTC gold and silver derivatives, a market 10 times the size of the Comex. These 2 COT banks also maintain concentrated short controlling positions in the futures markets).
Now, breaking down the footprints in more detail….
Preceding the pit selling, obvious spoofing was seen which given the signature footprints had to be from a COT algo and foreshadowed mal intent. If you recall from the MT post, we saw a very strong showing at the PM fix with large allocation sought in size, yet into the fix, we saw a block order of 10,000 GCQ contracts hitting all the bids for an $8 drop ahead of the fix followed by 35,000 contracts hitting all the bids for another $20 followed by a small $5 rise into the pit close where we saw large allocation sought at 1606. At this point, some short covering was seen, looking like a bottom likely drawing in some new longs, followed by another 30K selling tranche followed by the residuals over the remaining couple of hours. There was an obvious round off of short covering of around 50K seen into the pit close. This exercise resulted in an extremely profitable trade which also opened a window to repay/rebuy some previously underwater gold leases here in London.
and entire Maquire analysis at Turd's blog at the link below......
http://www.tfmetalsreport.com/blog/3978/army-advances
http://www.caseyresearch.com/gsd/edition/just-1965-these-are-golden-years
Just Like 1965: These are Golden Years
Jun
30
"And as many commentators have already said in today's column, the world's financial goose is pretty much cooked."
¤ YESTERDAY IN GOLD AND SILVER
As I mentioned in 'The Wrap' in Friday's column, the initial news out of Brussels early on Friday morning their time, caused a waterfall decline in the dollar...along with a bit of a melt-up in gold and silver prices...and as lunchtime approached in London, gold was up about eighteen bucks.
Then just before 12:00 o'clock noon, another rally began. This lasted until about 12:30 p.m. BST...and then sold off a bit going into the New York open fifty minutes later.
Once Comex trading began, away went the price to the upside...but ran into a not-for-profit seller at the $1,600 spot price level at precisely 9:00 a.m. Eastern...and from there it traded sideways until shortly before 1:00 p.m. Eastern time. Then gold rallied anew...and made it to its high tick of the day [$1,608.60 spot] about five minutes before the Comex close.
Then just before 12:00 o'clock noon, another rally began. This lasted until about 12:30 p.m. BST...and then sold off a bit going into the New York open fifty minutes later.
Once Comex trading began, away went the price to the upside...but ran into a not-for-profit seller at the $1,600 spot price level at precisely 9:00 a.m. Eastern...and from there it traded sideways until shortly before 1:00 p.m. Eastern time. Then gold rallied anew...and made it to its high tick of the day [$1,608.60 spot] about five minutes before the Comex close.
From there it was sold off gently...and the price was carefully closed below the $1,600 price market at $1,599.10...up $47.10 on the day. Without doubt, left to its own devices, the gold price would have closed up significantly more than that. Not surprisingly, net volume was very high at around 172,000 contracts.
Here's the New York Gold [Bid] chart for yesterday. I just wanted you to see the precise 9:00 a.m. intervention in the gold price with your own eyes. Nothing free-market about that.
Silver rallied on the news out of Brussels as well...and by 11:45 a.m. BST, silver was up about fifty cents. Then silver blasted higher at what might have been an early London silver fix.
Silver, like gold, also got sold off a hair at 12:30 p.m. in London, but that only lasted thirty minutes...and away it went to the upside again...and the rally accelerated at the Comex open. Within fifteen minutes silver had gained about 80 cents in what had obviously become a 'no ask' market. The silver price was going vertical. But the moment that it broke through the $28 spot price level, a not-for-profit seller showed up...and that, as they say, was that. It took 'da boyz' just over an hour to beat the silver price back to the Comex opening price. The high tick was $28.05 spot.
The silver price wasn't even allowed a sniff of that price level again, although it made every attempt to do so as, like gold, it rallied strongly into the Comex close. Then it got sold down over a percent going into the close of electronic trading Silver finished the Friday trading day at $27.49 spot, up $1.17. Net volume was pretty heavy at around 53,000 contracts.
Silver, like gold, also got sold off a hair at 12:30 p.m. in London, but that only lasted thirty minutes...and away it went to the upside again...and the rally accelerated at the Comex open. Within fifteen minutes silver had gained about 80 cents in what had obviously become a 'no ask' market. The silver price was going vertical. But the moment that it broke through the $28 spot price level, a not-for-profit seller showed up...and that, as they say, was that. It took 'da boyz' just over an hour to beat the silver price back to the Comex opening price. The high tick was $28.05 spot.
The silver price wasn't even allowed a sniff of that price level again, although it made every attempt to do so as, like gold, it rallied strongly into the Comex close. Then it got sold down over a percent going into the close of electronic trading Silver finished the Friday trading day at $27.49 spot, up $1.17. Net volume was pretty heavy at around 53,000 contracts.
The dollar index was quite a sight yesterday. To be sure, some of the rallies in the precious metals corresponded roughly to what was going on in the currency markets, but it certainly doesn't explain the big rallies in gold and silver that began at 11:45 a.m. in London...6:45 a.m. Eastern time...as the dollar was trading sideways at that point. The dollar index closed down 107 basis points at 81.63...but was down about 120 basis points at its New York low.
Here's the 3-day dollar index that shows the entire move on Friday.
The gold stocks gapped up about four percent at the open...but then [mysteriously?] got sold off until just before noon in New York before rallying once again to a secondary peak which came about fifteen minutes before the gold price rally ended at the Comex close. From there the stocks more or less traded sideways into the close. The HUI finished up 3.19%. Considering the size of the price move in gold, I was expecting better than this.
Here's the 3-day dollar index that shows the entire move on Friday.
I spoke with John Embry yesterday...and he was expecting better as well, as one junior gold producer that we both follow, actually finished unchanged on the day!
The silver stocks did better, but even then, there were some that didn't do particularly well. Nick Laird's Silver Sentiment Index closed up only 3.55%.
The CME's Daily Delivery Report showed that 15 gold and 235 silver contracts were posted for delivery on Tuesday. In silver, the only short/issuer was Jefferies, with all 235 contracts...and the two biggest long/stoppers were JPMorgan with 159...and the Bank of Nova Scotia with 72. The link to the Issuers and Stoppers Report is here.
There were reductions in both GLD and SLV yesterday...as authorized participants withdrew 67,924 troy ounces of gold and 1,745,755 ounces of silver.
The U.S. Mint had no sales report again on Friday, so they finished the month with sales of 54,500 ounces of gold eagles...10,000 one-ounce 24K gold buffaloes...and 2,593,000 silver eagles. Despite the lousy price action in the month just past, June gold and silver eagle sales were the third highest of the year.
My coin guy had his best sales day in June yesterday, as these higher prices brought out the procrastinators in droves.
On Thursday, the Comex-approved depositories reported receiving 609,909 troy ounces of silver...and shipped 473,360 troy ounces out the door. The link to that action is here.
Well, the Commitment of Traders Report in silver was a sight to see. The Commercial net short position declined by 4,943 contracts...and is now down to 12,011 contracts, or 60.0 million ounces. According to reader E.F...this is the smallest Commercial net short position since September 10, 2001...almost eleven years ago! We also have a 9-year low in the Non-Commercial net long position...and almost a 5-year high in the raptor [small Commercial traders other than the 'big 8'] net long position.
All that is just dandy, but here's the ugly news. The four largest Commercial traders are short 151.4 million ounces of silver...and the '5 through 8' largest traders are short an additional 44.8 million ounces. On a net basis the four largest traders are short 30.7% of the entire Comex futures market in silver, once all the Non-Commercial market-neutral spread trades are subtracted out. And once you remove the spread trades that only show up in the Disaggregated COT report, these four traders are short much more of the Comex silver market than that. Most of that is held by JPMorgan.
There were reductions in both GLD and SLV yesterday...as authorized participants withdrew 67,924 troy ounces of gold and 1,745,755 ounces of silver.
The U.S. Mint had no sales report again on Friday, so they finished the month with sales of 54,500 ounces of gold eagles...10,000 one-ounce 24K gold buffaloes...and 2,593,000 silver eagles. Despite the lousy price action in the month just past, June gold and silver eagle sales were the third highest of the year.
My coin guy had his best sales day in June yesterday, as these higher prices brought out the procrastinators in droves.
On Thursday, the Comex-approved depositories reported receiving 609,909 troy ounces of silver...and shipped 473,360 troy ounces out the door. The link to that action is here.
Well, the Commitment of Traders Report in silver was a sight to see. The Commercial net short position declined by 4,943 contracts...and is now down to 12,011 contracts, or 60.0 million ounces. According to reader E.F...this is the smallest Commercial net short position since September 10, 2001...almost eleven years ago! We also have a 9-year low in the Non-Commercial net long position...and almost a 5-year high in the raptor [small Commercial traders other than the 'big 8'] net long position.
All that is just dandy, but here's the ugly news. The four largest Commercial traders are short 151.4 million ounces of silver...and the '5 through 8' largest traders are short an additional 44.8 million ounces. On a net basis the four largest traders are short 30.7% of the entire Comex futures market in silver, once all the Non-Commercial market-neutral spread trades are subtracted out. And once you remove the spread trades that only show up in the Disaggregated COT report, these four traders are short much more of the Comex silver market than that. Most of that is held by JPMorgan.
In gold, the Commercial net short position declined by 19,531 contracts...and now stands at 144,160 contracts, or 14.4 million ounces. The four largest Commercial traders are short 10.0 million ounces...and the '5 through 8' traders are short an additional 4.9 million ounces. On a net basis the four largest Commercial short holders in gold are short 26.1% of the entire Comex gold market.
In gold, the eight largest traders are short 103.5% of the Commercial net short position. But in silver, the eight largest traders are short 327% of the Commercial net short position. Now that's concentration!
Here's Nick Laird's Total PMs Pool chart for the third time this week.
In gold, the eight largest traders are short 103.5% of the Commercial net short position. But in silver, the eight largest traders are short 327% of the Commercial net short position. Now that's concentration!
Here's Nick Laird's Total PMs Pool chart for the third time this week.
(Click on image to enlarge)
I have quite a few stories for your reading pleasure this weekend...and the final edit is up to you.
¤ CRITICAL READS
SubscribeAnother Domino Falls in the LIBOR Banking Scam: Royal Bank of Scotland
Another one bites the dust. The Royal Bank of Scotland is about to be fined $233 million (£150 million pounds) for its role in the Libor-rigging scandal. It joins Barclays as the first banks to walk the plank in what should be, but so far is not, the most sensational financial corruption story since the crash of 2008.
Many of the banks implicated in the Libor mess have also been targeted in the various municipal bond bid-rigging investigations, and RBS is no different – its subsidiary Natwest is also a defendant in the major civil lawsuit in the bid-rigging case. The cases aren't related, except in the sense that they both involve manipulation and anticompetitive cooperation. It's going to be harder and harder to make the case that the major banks do not routinely cooperate at the expense of the public when it serves their purposes to do so.
This very short Matt Taibbi blog was posted over at Rolling Stone magazine yesterday...and it's well worth your time. I thank Roy Stephens for his first offering in today's column...and the link is here.
Many of the banks implicated in the Libor mess have also been targeted in the various municipal bond bid-rigging investigations, and RBS is no different – its subsidiary Natwest is also a defendant in the major civil lawsuit in the bid-rigging case. The cases aren't related, except in the sense that they both involve manipulation and anticompetitive cooperation. It's going to be harder and harder to make the case that the major banks do not routinely cooperate at the expense of the public when it serves their purposes to do so.
This very short Matt Taibbi blog was posted over at Rolling Stone magazine yesterday...and it's well worth your time. I thank Roy Stephens for his first offering in today's column...and the link is here.
Mervyn King tells banks: you can't go on like this
Sir Mervyn King, the governor of the Bank of England, piled the pressure on the City on Friday when he said something had gone "very wrong" with Britain's banks that needed to be put right.
As Barclays and other high street banks became embroiled in a new mis-selling scandal, King launched his most scathing attack yet on the culture of banking in the five-year-long financial crisis.
King refused to say Bob Diamond was a "fit and proper" person to run Barclays as the reputational damage from an interest rate-fixing fine led to another fall in the bank's shares. More than £4bn has been wiped off the value of the bank since the rate-fixing scandal emerged.
"It is time to do something about the banking system," King said. As he warned that the outlook for financial stability had deteriorated as a result of the eurozone crisis, he dismissed mounting calls for a Leveson-style investigation into banks, saying that enough was already known to implement root and branch reform of the City.
This longish article appeared in The Guardian on Friday...and is Roy's second offering in a row. The link is here.
As Barclays and other high street banks became embroiled in a new mis-selling scandal, King launched his most scathing attack yet on the culture of banking in the five-year-long financial crisis.
King refused to say Bob Diamond was a "fit and proper" person to run Barclays as the reputational damage from an interest rate-fixing fine led to another fall in the bank's shares. More than £4bn has been wiped off the value of the bank since the rate-fixing scandal emerged.
"It is time to do something about the banking system," King said. As he warned that the outlook for financial stability had deteriorated as a result of the eurozone crisis, he dismissed mounting calls for a Leveson-style investigation into banks, saying that enough was already known to implement root and branch reform of the City.
This longish article appeared in The Guardian on Friday...and is Roy's second offering in a row. The link is here.
The $289 Trillion Dollar Problem: David Chapman
Two hundred and eighty-nine trillion dollars. An unimaginable amount. That is the total of derivatives outstanding at the top five US bank holding companies as of March 31, 2012, according to the Office of the Comptroller of the Currency (OCC).
The five holding companies are JP Morgan Chase, Bank of America, Citigroup, Morgan Stanley and Goldman Sachs. They hold roughly 45% of all over-the-counter derivatives outstanding in the world, based on the $648 trillion total estimated by the Bank for International Settlements. Others estimate that the total global derivatives outstanding could be as large as $1.2 quadrillion, or $1,200 trillion.
The five banking behemoths are so large in the global derivatives market that they would appear to be the market. According to the OCC, their outstanding holdings constitute some 95% of the US market total of approximately $302 trillion. Over the past decade the amount of outstanding derivatives has exploded. Since the end of 2002 the outstandings of the bank holding companies have grown from $58.2 trillion to $302 trillion an increase of 419%.
This is a fairly long read, but gives you some idea as to just how gargantuan the derivatives market has become. I had something about it in my column earlier this week. This report is rather technical...and my best advice is for you to read until your eyes start to glaze over. It was posted over at the goldseek.comwebsite on Thursday...and I thank reader U.D. for bringing it to my attention. The link is here.
The five holding companies are JP Morgan Chase, Bank of America, Citigroup, Morgan Stanley and Goldman Sachs. They hold roughly 45% of all over-the-counter derivatives outstanding in the world, based on the $648 trillion total estimated by the Bank for International Settlements. Others estimate that the total global derivatives outstanding could be as large as $1.2 quadrillion, or $1,200 trillion.
The five banking behemoths are so large in the global derivatives market that they would appear to be the market. According to the OCC, their outstanding holdings constitute some 95% of the US market total of approximately $302 trillion. Over the past decade the amount of outstanding derivatives has exploded. Since the end of 2002 the outstandings of the bank holding companies have grown from $58.2 trillion to $302 trillion an increase of 419%.
This is a fairly long read, but gives you some idea as to just how gargantuan the derivatives market has become. I had something about it in my column earlier this week. This report is rather technical...and my best advice is for you to read until your eyes start to glaze over. It was posted over at the goldseek.comwebsite on Thursday...and I thank reader U.D. for bringing it to my attention. The link is here.
Financial ‘Armageddon’ Will Happen Despite EU Deal: Jim Rogers
Even as markets cheered the agreement by European leaders to allow the direct use of the bloc’s bailout funds to recapitalize struggling banks, well-known investor Jim Rogers told CNBC the move does nothing to help solve the region’s biggest problem, which is its high debt levels.
“Just because now you have a way to get them (the banks) to borrow even more money, this is not solving the problem, this is making the problem worse,” Rogers said on Friday.
“People need to stop spending money they don’t have. The solution to too much debt is not more debt. All this little agreement does is give them (banks) a chance to have even more debt for a while longer,” he added.
That pretty much sums it up. This story was posted on the CNBC Asia website early yesterday morning Hong Kong time...and I thank West Virginia reader Elliot Simon for sending it along. The link is here.
“Just because now you have a way to get them (the banks) to borrow even more money, this is not solving the problem, this is making the problem worse,” Rogers said on Friday.
“People need to stop spending money they don’t have. The solution to too much debt is not more debt. All this little agreement does is give them (banks) a chance to have even more debt for a while longer,” he added.
That pretty much sums it up. This story was posted on the CNBC Asia website early yesterday morning Hong Kong time...and I thank West Virginia reader Elliot Simon for sending it along. The link is here.
There's no plan and everything is a lie, Sprott tells King World News
Sprott Asset Management CEO Eric Sprott tells King World News today there's no plan to fix the European financial system, that everything from government officials is a lie, and that there's nothing to do but wait for governments to get out of the business of gold price suppression.
I borrowed the headline and the introductory paragraph from a GATA release yesterday. This KWN blog is a must read for sure...and the link is here.
I borrowed the headline and the introductory paragraph from a GATA release yesterday. This KWN blog is a must read for sure...and the link is here.
and...
http://www.silverdoctors.com/gold-cot-report-62912-commercials-cover-2-million-ounces-shorts-at-historic-lows/
Gold COT Report 6/29/12: Commercials Cover 2 Million Ounces- Shorts at Historic Lows
Submitted by SD Contributor Marshall Swing
As I repeat, every week, the goal of the producer/merchant commercials is to get out of their massive short positions because they know the hand writing on the wall now and see what is coming clearly. They continue to reposition their short positions to make their fall from grace as painless as possible.
Commercials picked up 4,917 longs and a covered a massive -14,614 shorts to end the week with 55.08% of all open interest, an decrease of about .5% from the previous week. Commercials now stand as a group at 14,416,000 ounces net short, a huge decrease of almost 2,000,000 ounces net short from the previous week.
The swap dealers actually increased 5,217 longs while covering -5,720 shorts.
The producer merchant added 1,923 longs and covered a massive -6,671 shorts.
Large speculators coughed up -9,808 longs while picking up 3,981 shorts for a net long position of 12,261,900 ounces, a decrease in their net long position of just under 1,500,000 ounces from the prior week.
The smart small speculators held their ground and only forked over -532 longs but broke the piggy bank when grabbing 5,214 shorts for a net long position of 2,154,100 ounces an decrease of over 500,000 ounces in their net long positions from the prior week. Two weeks ago I stated “The small specs are holding those short positions ferociously”. What we see now is the small speculators are determined to play the short game despite all odds being against them. There is, in fact, a way to play this game with the producer/merchant and it will be interesting to see how long the smalls hold these shorts.
Just realize one thing, it is always possible their shorts from 2-3 weeks ago were sold during the raids and these 5,214 new shorts are brand spanking new positions which also would mean there are actually many thousands more new small shorts because that would make the math balance. Most people, unless they follow the daily bulletins very closely do not realize there is a hidden world in these numbers that never sees the light of day except when compared to the intra-day charts and daily bulletin. Knowing those factors is the only way to play short term in the future’s markets.
This was my quote last week:
“Overall, what the commercials are setting up for, considering the action on Thursday, is to define whether or not the speculators will have the appetite to go long hoping against hope that a bottom is in and some fast money can be made. Expect there to be an HFT spike at some point Monday but more likely Tuesday or later to coax the specs back into the game. If that spike fails, then we will see considerably lower prices in the near future.”
If you examine the uptick in spot price carefully, you will see there has been no resistance whatsoever from the producer merchant to bring the price back down. That means they are causing the price rise and it is a trap for the speculators. If there is not significant long buying on the part of the speculators, the producer/merchant will slam those new gains back into the concrete very quickly. The most suspicious part of the end of the week price rise was that it started in Asia. We almost never, ever see price change much in Asia during the off hours. Very suspicious, indeed.
As I repeat, every week, the goal of the producer/merchant commercials is to get out of their massive short positions because they know the hand writing on the wall now and see what is coming clearly. They continue to reposition their short positions to make their fall from grace as painless as possible.
One last thing I want to point out this week is the swap dealers are now net short only 28,800 ounces of the yellow metal. Compare that to just a week ago when they were short 1,122,500 ounces and two weeks ago when they were short 1,959,800 ounces.
http://www.silverdoctors.com/silver-cot-report-62912/
Submitted by SD Contributor Marshall Swing
SILVER COT REPORT 6/29/12
Commercials picked up 1,144 longs but covered a massive -3,799 shorts to end the week with 43.27% of all open interest, a mammoth change since last week, and now stand as a group at -60,055,000 ounces net short, almost 25,000,000 less net short ounces from the previous week.
Technically, this is one for the history books.
Very few weeks have ever seen these huge percentage point changes!
Last week, these same commercials had 45.65% of all open interest. That is almost a 2.5% change in just one week.
Large speculators picked up 595 longs but stocked up for Armageddon by purchasing 4,475 shorts for a net long position of 31,110,000 ounces, a 40% decrease in their net long position of almost 20,000,000 ounces from the prior week. Are these large specs intending to become the next silver short tandem of Jamie Dimon and Blythe Masters? Just do the comparison from last week’s COT report
http://www.silverdoctors.com/silver-cot-report-for-period-613-6192012/
Small speculators gave up -141 longs and purchased a very significant 922 shorts for a net long position of 28,945,000 ounces a dramatic decrease of over 5,000,000 ounces net long from the prior week.
The real question here is on what days, exactly, did the speculators pick up all those shorts? If it was early in the reporting period then they are in the money but if late in the reporting period then that tells us exactly why the uptick in price after close Thursday, opening in Asia, and on into Friday morning in Europe. The sudden rise Friday morning may have been the opportunity for the commercials to rid themselves of some of those speculator shorts.
One more thought is that price is now in between the low on Thursday and the reporting period high about Wednesday of last week. Could be that the commercials are not sure just what the speculators intentions are with those shorts and see the speculators as hanging tough in the trenches?
Looking at the commercials, we see the swap dealers were able to add another 1,382 longs during this period.
It has not been all that many weeks since they were a mere 57,000,000 ounces net long. Now they are 98,405,000 ounces net long.
What a difference a couple of months makes!
* * *
http://harveyorgan.blogspot.com/2012/06/germany-blinks-bitesm-to-be-modifiedno.html
FRIDAY, JUNE 29, 2012
Germany Blinks a bit/ESM to be modified/No real change in Italian or Spanish bond yields
Good morning Ladies and Gentlemen:
Gold closed up today by $41,00 to $1598.00. Silver also joined the party up 1.17 to $27.49
Yesterday a lot happened with respect to Europe which will be hugely bullish for gold. Basically Germany blinked a bit as they agreed to modify the ESM to directly loan to the troubled banks and to remove the seniority of the ESM. These terms must be re ratified and I doubt that various parliaments will agree to it. So it looks like we will have a modified version of the EFSF. We will go into all of these details bel but first let 's travel to the comex. I am using my lap top as I am away so please forgive me as I struggle through thisl
Let us now head over to the comex and assess trading today.
The total gold comex OI rose by approximately 1000 contracts to finish the week at 416,509. The non official delivery month of July saw its OI fall from 735 to 694 for a loss of 41 contracts. The next delivery month is August and here the OI remained relatively constant at 213,193. The estimated volume on Friday was 210,172 which was huge. The estimated volume yesterday was more subdued at 153,915.The total silver comex oi rose again by about 1400 contracts from 123988 to 125,366. The front delivery month saw its OI fall from 10,220 to 3,952. Thus on a preliminary basis it looks like we will have a touch less than 20 million oz standing which is good but I expected a little better. The next delivery month is September and here the OI rose by a monstrous 7,000 contracts from 58,999 to 65,703. It seems that we have a lot of paper players wishing to take on the banking cartel. The estimated volume today was quite high at 61,510. The confirmed volume yesterday was monstrous at 91,864. However we had considerable switches into September
Gold closed up today by $41,00 to $1598.00. Silver also joined the party up 1.17 to $27.49
Yesterday a lot happened with respect to Europe which will be hugely bullish for gold. Basically Germany blinked a bit as they agreed to modify the ESM to directly loan to the troubled banks and to remove the seniority of the ESM. These terms must be re ratified and I doubt that various parliaments will agree to it. So it looks like we will have a modified version of the EFSF. We will go into all of these details bel but first let 's travel to the comex. I am using my lap top as I am away so please forgive me as I struggle through thisl
Let us now head over to the comex and assess trading today.
The total gold comex OI rose by approximately 1000 contracts to finish the week at 416,509. The non official delivery month of July saw its OI fall from 735 to 694 for a loss of 41 contracts. The next delivery month is August and here the OI remained relatively constant at 213,193. The estimated volume on Friday was 210,172 which was huge. The estimated volume yesterday was more subdued at 153,915.The total silver comex oi rose again by about 1400 contracts from 123988 to 125,366. The front delivery month saw its OI fall from 10,220 to 3,952. Thus on a preliminary basis it looks like we will have a touch less than 20 million oz standing which is good but I expected a little better. The next delivery month is September and here the OI rose by a monstrous 7,000 contracts from 58,999 to 65,703. It seems that we have a lot of paper players wishing to take on the banking cartel. The estimated volume today was quite high at 61,510. The confirmed volume yesterday was monstrous at 91,864. However we had considerable switches into September
and....
Gold will finally be brought back into the financial system as a tier one asset and a riskless one at that.
(courtesy, Hathaway, Von Greyerz and Kingworld news)
(courtesy, Hathaway, Von Greyerz and Kingworld news)
Hathaway, von Greyerz see growing legitimacy for gold
Submitted by cpowell on Fri, 2012-06-29 06:27. Section: Daily Dispatches
the formula used in the lease:
Current Interest Rate that one can obtain on a debt instrument on a set duration minus libor costs per set duration = lease rate.
by keeping libor low or equal to current interest rate, the lease rates were positive. A negative lease rate in gold would have put gold in backwardation.
(courtesy Robert Winnett/the UK Telegraph/GATA)
As British banks faced a potential criminal investigation billions were wiped off their value, with shares in Barclays falling by 15.5%. RBS's share price plunged by more than 10 percent yesterday, wiping more than L2 billion off the value of taxpayers' stake in the bank.
Submitted by Tyler Durden on 06/29/2012 07:08 -0400
1:26p ICT Friday, June 29, 2012
Dear Friend of GATA and Gold:
Interviewed by King World News, Tocqueville Gold Fund manager John Hathaway sees signs in Europe and the United States that gold is being brought back into the financial system as the best sort of collateral if not as money itself:
Also at King World News, Matterhorn Asset Management's Egon von Greyerz analyzes the financial turmoil, heaps contempt on the European political leadership, and says gold will come out on top:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
and...The following should also bring to light the gold manipulation as libor rates are critical in the determination of lease rates for gold. The rigging was necessary to keep gold from going into backwardation as Europe and the USA went into ZIRP (zero rate interest policy)
the formula used in the lease:
Current Interest Rate that one can obtain on a debt instrument on a set duration minus libor costs per set duration = lease rate.
by keeping libor low or equal to current interest rate, the lease rates were positive. A negative lease rate in gold would have put gold in backwardation.
(courtesy Robert Winnett/the UK Telegraph/GATA)
RBS and Lloyds drawn into rate-rigging scandal
Submitted by cpowell on Fri, 2012-06-29 05:43. Section: Daily Dispatches
By Robert Winnett
The Telegraph, London
Thursday, June 28, 2012
The Telegraph, London
Thursday, June 28, 2012
Royal Bank of Scotland and Lloyds have been accused of systematically rigging financial markets in a growing international scandal that wiped billions off the value of shares in Britain's biggest banks.
Bob Diamond, the chief executive of Barclays, is under pressure to resign after the bank admitted it had conspired to fix global interest rates, with David Cameron, the prime minister, saying he should take responsibility.
The scandal now threatens to engulf taxpayer-funded Lloyds and RBS, which according to court documents obtained by The Daily Telegraph have also been accused of routinely distorting basic financial data used to set interest rates.
As British banks faced a potential criminal investigation billions were wiped off their value, with shares in Barclays falling by 15.5%. RBS's share price plunged by more than 10 percent yesterday, wiping more than L2 billion off the value of taxpayers' stake in the bank.
Executives at HSBC are also being investigated alongside London-based financial firms for their role in the scandal, which is estimated to have cost consumers, investors, and businesses L30billion.
Mr Diamond's position appears increasingly fragile. Vince Cable, the Business Secretary, said that he could be banned from running a British company following regulatory investigations.
David Cameron suggested that Mr Diamond should resign, saying that "people have to take responsibility for the actions" and that this process must go "all the way to the top."
The growing scandal, which has international implications but largely took place in the City of London, has led to calls for the Prime Minister to establish a public inquiry into the banks.
Downing Street had initially tried to dismiss the situation as a "regulatory matter" but ministers yesterday queued up to condemn Barclays and other banks, as it emerged that:
-- The Serious Fraud Office has begun talks with regulators over potential criminal investigations into senior Barclays executives and other bankers.
-- George Osborne said the scandal was a "shocking indictment of the culture at banks like Barclays" as he pledged to tighten the law to make criminal prosecutions possible.
-- A Barclays whistleblower accused the Government of failing to address the scandal which he first exposed more than four years ago.
-- A former trader at the Royal Bank of Scotland claimed that it was "common practice" among senior employees to make requests to fix the Libor rate -- and that senior management knew about the tactic.
-- An independent analysis presented to American courts estimated that the scandal may have cost $45 billion (L30 billion) during the financial crisis alone. Most of the losses may have been incurred by pension funds and other investors.
-- Senior financiers warned that the City's position as a trustworthy place to conduct business was under threat by the action of the London bankers.
Earlier this week, Barclays was fined a record L290 million after it admitted that its traders and managers repeatedly made "false reports" in order to push Libor and other interest rate measures higher or lower than its true rate.
The manipulations helped increase traders' profits and initially protected Barclays' reputation.
However, they cost consumers and business dear. Market rules dictate that executives providing information to set Libor rates should be isolated from traders who have a financial interest in the rates.
One Barclays trader wrote: "Dude. I owe you big time! Come over one day after work and I'm opening a bottle of Bollinger."
The country's most senior politicians condemned Barclays and the bank's executives.
Speaking in Brussels, the Prime Minister said: "I'm determined we learn all the lessons from what has happened at Barclays. People have to take responsibility for the actions and show how they're going to be accountable for those actions. It's very important that goes all the way to the top of the organisation."
Mr Diamond is expected to be hauled before a Parliamentary Committee next week to answer "some serious questions."
Vince Cable Business Secretary said that it would be "seriously premature" to decide now whether Mr Diamond should be sacked, but added that the Government did have powers to disqualify directors.
"If the facts suggested action -- and obviously we would be subject to legal advice; this is a legal process -- then indeed that could well follow," he said.
Mr Diamond was resisting calls to resign and the Barclays board was said to be supportive of his ongoing position. However, the bank is likely to consider further actions -- possibly including repaying previous bonuses -- in the coming days.
Senior sources said they were "taken aback" by the political reaction to the scandal, but believed that part of the reason the share price had fallen yesterday was the concern that Mr Diamond would be forced to resign and this would damage the bank.
Mr Diamond, one of the country’s top paid bankers who previously headed Barclays' investment banking division, has already acknowledged that the settlement over the scandal with regulators would damage customer trust in the bank, and said he and other senior executives would forgo bonuses this year.
The British Bankers Association (BBA), which establishes the parameters for how Libor is set each day, said it was "shocked" by the behaviour that led to Wednesday's fine, and called on the government to look at imposing new rules.
"The banks which contribute to the Libor rate must meet the necessary obligations to their regulators," the BBA said. "As part of this review we will now be asking the authorities to consider in what manner the Libor setting mechanism should be regulated in the future."
More than 20 other banks are being probed by regulators from London to Japan and Brussels to North America.
"Barclays was extremely cooperative and the majority of these cases come down to not just the complexity but whether a firm is willing to cooperate and how much a firm is willing to cooperate above and beyond their legal requirements," a regulatory source said.
Others who have already fired, suspended, or seen staff leave after internal investigations include JPMorgan, Deutsche Bank, RBS, and ICAP, run by former Conservative treasurer Michael Spencer.
"One of the reasons London is a major international financial centre is because of the perceived emphasis on trust and integrity in the London market," said Simon Culhane, the chief executive of the Chartered Institute for Securities and Investment. "This scandal can only serve to damage London's reputation."
and....
Last Night's Critical Phrase "No Extra Bailout Funds"
There was just one relevant phrase uttered in all of last night's bluster, and ironically it came from Italy's own Mario Monti who said that there are "no plans for boosting bailout funds." This really is all that matters. Why? The Bridgewater chart that we presented before once again explains it all.
We have at best kicked the can down the road for a few days.
end
Spanish bonds instead of lowering by 60 basis points only had a slight downward movement in yield as did the Italian 10 yr bond. Here are the salient points to bring to your attention:
1. the ESM will probably be scrapped as it needs to be re- ratified by all 17 nations as the seniority section has been stripped.
2. Thus we will see something like the crammed down PSI in Greece where the private sector gets beaned by a fastball and the official sector does not. Thus the English law written Spanish and Portuguese bonds are now so important and they will trade higher in price than the locally written bonds.
3. We do not know what conditions Germany will ask for and the German parliament decides on the new ESM/EFSF terms.
4. There is going to be one supervisory body overseeing this and with 17 nations all with different thoughts on the matter, I would say that this is next to impossible.
5. The agreement is nothing but a Memorandum of Understanding, the weakest form of a non binding agreement.
Thus in essence, we have a plan to implement a plan which will be impossible to supervise and the total sums of money necessary will not be coming forth...and then
and....
And now Graham Summers on his take on the situation.
Basically, the same as all of the other authors. He emphasizes that Europe does not have a liquidity problem but a solvency problem and as such these announcements will be short lived and I agree with him:
(courtesy Graham Summers/Phoenix Research Capital)
Submitted by Phoenix Capital Research on 06/29/2012 08:06 -0400
changers.
Basically, the same as all of the other authors. He emphasizes that Europe does not have a liquidity problem but a solvency problem and as such these announcements will be short lived and I agree with him:
(courtesy Graham Summers/Phoenix Research Capital)
The EU Summit: Europe Needs Capital, NOT Political Posturing
changers.
They are not.
One facet of the deal is that ESM/ EFSF loans to troubled countries will not subordinate private bondholders holdings. While this does serve the purpose of allowing private bondholders to feel that should a country default, they might get their money back sooner (as opposed to what happened in Greece)… it doesn’t change the more critical issue of stoppingdefaults from happening.
Indeed, if Spain were to default, the fact that I as a potential private bondholder would be further up the line to collect my funds doesn’t do me a whole lot of good, does it? My money’s gone, at least most of it. So the benefits of this move are of borderline significance.
Moreover, none of the measures address the most critical issue pertaining to Europe: where is the money going to come from?
As I have noted before, the European Stability Mechanism, which everyone sees as the ultimate savior for the EU, does NOT exist yet. Only four out of the required 17 countries have ratified its legislation.
And the due date for ratification? July 9th.
So we have less than two weeks for 14 EU members to ratify the ESM.
Another interesting fact about the ESM… Spain and Italy will contribute 30% of its funding. So… the mega-bailout fund which is going to save Spain and Italy is receiving nearly one third of its funds from the very same countries it’s going to bail out!?!
You couldn’t make this stuff up if you tried.
Another topic worth discussing is the fact that EU leaders didn’t agree to increase the EFSF or the ESM. The simple and obvious reason for this is no one has the funds to do this.
I’ve been saying this for months. No one seems to be listening: Europe is out of buyers. End of story. There simply isn’t €500 billion lying around to be put to use. That’s why the ESM and EFSF aren’t being increased in size. They couldn’t be.
Another point, and perhaps the most key one is that the ECB will now be using bailout funds to help recapitalize EU banks. This move will ultimately end up hurting the banks that seek funding from the ECB much as those firms which drew on the ECB’s LTRO1 and LTRO 2 schemes found themselves severely punished in the credit and bond markets.
After all, requesting aid is essentially a public admission that one’s bank is in major trouble. In this end this hurts the bank seeking aid as everyone now knows that it’s on the ropes.
Indeed, as we saw with LTRO 2 (which provided over €500 billion to EU banks), those banks that drew on the ECB saw, at most, one month’s worth of gains before they were right back to where they started in terms of share price and funding needs.
Oh, and none of this will go into effect until December. Let’s hope Spain and Italy and others don’t need the funds beforethen!
My take on this whole mess?
- The benefits of the announcements (lower yields on sovereign bonds and higher share prices in EU banks) will be short-lived.
- None of these decisions address the core issues facing the EU banking system: namely, insolvency and excessive leverage.
- No one in the EU actually has the money to make these measures work (again, Spain and Italy will provide 30% of the ESM’s funding).
Markets will stage a knee jerk reaction to these measures. That reaction will see bank shares rise and yields fall, temporarily. But this move will be short-lived, just as moves following LTRO1 and LTRO 2 were. After all, these announcements are just more political measures than anything else. And Europe needs capitalNOT politics at this point.
So I would expect this rally and the drop in bonds to be short-lived. EU leaders may have put off the Crisis by a few weeks (or perhaps even a month). But they still haven’t addressed the core issues causing the Crisis: excess leverage courtesy of hundreds of billions of Euros’ worth of garbage debt.
No comments:
Post a Comment